A Northwestern Perpetual Scholarship. Courtesy of the Chicago Historical Society.
Perpetual Scholarships
Although Northwestern received financial support from its founders, in its early days, the University needed additional funds to begin operations. As a result the trustees turned to a method that was not unusual in those days - the sale of "perpetual scholarships."
A $100 Investment
Sold from 1853 to 1867 for $100 in four installments of $25, the scholarships entitled the purchaser and his male heirs free tuition at Northwestern. The scholarships provided a double benefit to the fledging University in that they brought in immediate cash as well as the promise of future students. The University also offered limited term "transferable" scholarships for a lesser amount that guaranteed a certain number of years of free tuition.
The perpetual scholarships, however, were a key component of the University's early planning. After earlier deciding to open a preparatory school to prepare future University students, the trustees in June 1853 decided to raise $200,000, half of which was expected to come from the sale of perpetual scholarships.
Selling Scholarships
At that same meeting, the trustees elected Clark T. Hinman as Northwestern's first president. It was an inspired choice. Hinman, an influential Methodist minister and church leader from Michigan, was instrumental in the ensuing decision not to locate Northwestern in Chicago. He also strongly advocated building the University first, rather than the preparatory school.
Most important, Hinman was a first-rate evangelist for the new institution. He traveled the Midwest, talking to church leaders, meeting with potential faculty, and selling perpetual scholarships. He is credited with the sale of $63,000 worth of scholarships before his untimely death in October 1854 before a single student enrolled. Given that $100 was a considerable sum of money in those pre-Civil War days, the financing mechanism proved remarkably successful.
Cashing In, Generations Later
Originally, the perpetual scholarships were limited to the purchaser and his male heirs. After the University became coeducational, that provision was broadened to include female heirs of the original purchaser as well.
However, the provisions remain in effect that only one family member per generation may use the scholarship and that the scholarship must be bequeathed specifically to a descendant.
The University still honors the scholarships; approximately 400 other students have used the scholarship.